Redefining Travel Commerce dbaccess European TMT Conference, September 2016
Disclaimers Related to Forward-Looking Statements Certain items in this presentation and in today s discussion, including matters relating to revenue, net income (loss), and percentages or calculations using these measures, capital structure, future business opportunities, plans, prospects or growth rates and other financial measurements and non-financial statements in future periods, constitute forward-looking statements. These forward-looking statements are based on management s current views with respect to future results and are subject to risks and uncertainties. These statements are not guarantees of future performance. Actual results may differ materially from those contemplated by forward-looking statements. Travelport Worldwide Limited (the Company or Travelport ) refers you to our periodic reports and filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016, for the quarter June 30, 2016, filed with the SEC on August 4, 2016, for additional discussion of these risks and uncertainties, as well as a cautionary statement regarding forward-looking statements. Forward-looking statements made during this presentation speak only as of today s date. Travelport expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Related to Non-GAAP Financial Information Travelport analyzes its performance using Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share, Adjusted Operating Income/(Loss), Capital Expenditures, Net Debt, and Adjusted Free Cash Flow, which are non-gaap financial measures. Such measures may not be comparable to similarly named measures used by other companies. The Company believes these measures provide management with a more complete understanding of underlying results, trends and the liquidity of the core operating business, along with the Company s ability to meet its current and future financing and investing needs. Adjusted EBITDA is the primary metric, used to evaluate and understand our underlying operations and business trends, forecasting and determining future capital investment allocations. Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share and Adjusted Operating Income/(Loss) are also used by the Board of Directors to determine incentive compensation for future periods. Capital Expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. These measures are disclosed so that investors have the same tools as those available to management when evaluating the results of Travelport. These non-gaap measures are defined in the Definitions appendix of this presentation and discussed and reconciled to GAAP measures in our quarterly and annual filings with the SEC. 2
Creating long-term shareholder value Strong core Differentiated focus Leading technology Truly global Focused on the markets that need us Compelling financials Disciplined capital allocation Core business model is resilient, recurring and transaction-based with strong competitive advantages Differentiated platform approach to address evolving travel commerce ecosystem in airline merchandising, hospitality, mobile commerce and payments Significantly upgraded technology platform and industry-leading product suite Broad international presence to leverage international focus of our customers Strong focus on corporate and servicepremium travel Entering clear growth phase with multiple, compelling drivers Capital-light model with strong free cash flow generation and clear and disciplined approach to capital allocation 3
Industry leader with global, differentiated platform Travelport has transformed through investments to lead the global travel distribution industry. Our platform is differentiated in 5 key areas and is fully focused on value creation for our customers. LCC Distribution Hospitality and Digital Media Mobile Commerce Airline Merchandising B2B Payments 4 Global travel distribution industry s clear leader in GD G
Airline hosting is critical for back-end IT systems but does not drive value creation at the front-end Majority of world s largest airlines do not use Amadeus or Sabre PSS But six of ten utilize IT solutions provided by Travelport Hosting decisions do not drive distribution decisions By definition travel intermediaries book all carriers regardless of host Top 10 Global Airlines 1 in 2015 (in millions) 201 179 140 117 109 101 94 90 79 70 American Delta United Southwest China Southern Ryanair China Eastern Air China Lufthansa easyjet Hosted by Sabre Sonic Hosted by Travelport, development by Delta Not Hosted on Amadeus Altea or Sabre Sonic Product (2) Not Hosted on Amadeus Altea or Sabre Sonic Product Not Hosted on Amadeus Altea or Sabre Sonic Product Hosted on Navitaire, recently purchased by Amadeus Not Hosted on Amadeus Altea or Sabre Sonic Product Not Hosted on Amadeus Altea or Sabre Sonic Product Hosted on Amadeus Altea Product Not Hosted on Amadeus Altea or Sabre Sonic Product 5 1. Top 10 global airlines measured by passengers boarded represent around a third of global passengers boarded; Source: CAPA 2. Southwest uses Amadeus Altea for international flights, being a small proportion of Southwest s business
Travelport is focused on differentiated value creation at the front-end Airline content Network carriers Low cost carriers Airline merchandising Ancillaries and branded fares Tailored offerings Aggregated shopping Distribution Travel Commerce GDS IT Solutions Platform GDS Hotels ~650,000 chain & independent hotel properties Other distribution ~60 cruise lines 13 major rail networks Content Hospitality Hotels Rental car and ground transport transport B2B travel industry digital media B2B travel industry digital media Payments enett Front-End Travelport remains essentially a transaction fee based business Back-end: IT solutions Car rental ~36,000 car rental locations Mobile commerce MTT Locomote 6
The key proof points of our industry-leading platform Airline distribution and merchandising Hospitality attachment 65% of Air segment revenue in FY 15 from away bookings (FY 11: 58%) 177 airlines 1 live with merchandising, including fares families, branded fares, ancillaries and tailored offers FY 15 FY 14 FY 13 FY 12 FY 11 Hospitality segments per 100 airline tickets issued 38 41 40 43 47 1H 2016 48 Mobile commerce Payments MTT continues to perform well adding global airlines and TMCs to its client roster, across multiple regions 1H 2016 revenue up +81% to $71m Etihad Airways mobile app launched in the App Store on April 11, 2016 FY 15 FY 14 FY 13 FY 12 FY 11 $19m $2m $45m enett revenue $67m $92m 7 1 As of September 5, 2016
Our model selling the way the airlines want to sell Before: Legacy Desktops After: Travelport Smartpoint Traditional GDS screen used to present airline products for well over 30 years Screens reduce airline s product offerings to a line of alphanumeric text Much less intuitive user interface for agents Travelport s proprietary point-of-sale application is fully deployed for travel agencies and management companies Integrates Rich Content and Branding merchandising capabilities Enables sale of ancillary services and promotion of entire product value and brand propositions Changing the distribution paradigm with a supplier-centric focus on presenting product to the customer 8
Airlines signed up to Rich Content and Branding represent ~60% of our air segment volumes Our high value-adding merchandising solutions, including Rich Content and Branding, continue their rapid momentum Etihad.com - Business Class with Etihad is not business as usual Now at a critical mass of participation; >200 airlines signed to date represent ~60% 1 of our air segment volumes Travelport - Airline merchandising today within our award-winning Smartpoint point-of-sale 9 Travelport has 177 airlines implemented and >200 signed (fare families & ancillaries) Amadeus has 30 implemented and 39 signed for fare families, and Sabre??? 1 Represents percentage of air segment volumes (for the twelve months to June 30, 2016) derived from airlines signed to Rich Content and Branding as of September 5, 2016
Travelport's tailored offerings another unique differentiator Travelport has further expanded its product set to include tailored offerings Tailored merchandising available through our universal API (uapi) technology Tailored offerings include negotiated deals between corporates and airlines; available through self-booking tools and to travel agencies Tailored merchandising made real today within our award-winning Smartpoint point-of-sale 10 No other GDS has this unique and cutting edge capability
We offer leading airline technology to our partners Travelport provides a broad range of innovative technology solutions and services to our customers to enhance their direct selling and customer experience capabilities Delta Hosting Solutions Branded Fares Mobile Commerce Data Analytics Delta Hosting Signed new long-term agreement in 2014 to run Delta host reservation and key operating system (AIR4) Recently upgraded to ztpf Provide Rapid Reprice, EMD and other technology Extending to other Delta investment carriers (Virgin Atlantic) 11 Emirates Inspire Me - exclusive live-search solution: proprietary mapping and search technology infuses real-time availability and pricing into the search process Emirates Fare Branding and Upsell - choose the right fare brand based on value, not just the lowest price, and easily upgrade to the next branded fare MTT focuses on delivering world-class mobile solutions to leading airlines, hotels and travel agencies Designs and runs mobile apps for easyjet, BCD Travel, LATAM, Etihad, Saudia, Capita Travel and Singapore Airlines Multi-award winning service Cloud-based data and analytics for route planning, fares, revenue management and sales effectiveness Global scale and used by multiple airlines
Case study: Value-add solutions for Emirates direct selling channels 12
International (excl. US) air market share is stable International regions (~70% of total GDS market) tend to yield higher RevPas and margins than the US 60% 50% 40% International GDS segments 4% CAGR between Q2 12 and Q2 16; faster than US segments 30% 20% 10% Travelport International air share is stable 0% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Travelport Amadeus Sabre & Abacus Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 13
Differentiated focus on travel commerce Beyond Air Hotel Distribution ~650,000 hotel properties bookable Retail rates for independent hotels from leading aggregators (Travelport Rooms and More) Corporate rates for independent hotels (Hotelzon) ~36,000 car rental locations bookable ~60 cruise lines & tour operators and 13 major rail networks 14 Car, Tours and Other Distribution BEYOND AIR 2015 revenue: $492m (+16%) 23% of Travel Commerce Platform Revenues (21% in FY 2014) Digital and Mobile Solutions Mobile platform and apps for the travel industry (MTT) Corporate self-booking tools (Locomote and Hotelzon) Digital media B2B advertising (~3,500 advertisers) B2B payments by travel agencies to travel providers (enett) The only GDS with this attached Growing at a rate which is 10x higher than WEX in travel Payments
Powering hotel distribution to corporate and retail Travelport Smartpoint includes significant further enhancements to hotel booking Travelport Hotelzon enhancing content, efficiency and choice in the corporate hotel booking market Travelport Smartpoint version 7.1, launched July 2016 Latest version of Hotelzon Online Travelport has significant advantages through the depth and breadth of hotel content all bookable in real-time 15
Focus on mobile commerce provides differentiation and value Travelport Mobile Focused on delivering world-class mobile solutions to leading airlines, hotels and travel agencies Airline customers use a variety of IT solutions providers ~200 employees specialized in mobile travel commerce 22 million downloads to date of apps developed by Travelport for customers; top-rated travel app in 78 different countries Key adjacency that significantly enhances Travelport s Beyond Air value proposition, with mobile fast becoming the key travel commerce channel Key customers include: Example Locomote apps: Locomote Corporate Travel Platform Strengthens offering to both Corporates and TMCs, combining mobile technology with leading travel content Corporate travel management apps, focused on providing solutions for all corporate travel management needs, incorporating artificial intelligence and actionable data analytics 16
Fast-growing enett is redefining B2B payments Driving security, efficiency and value for travel agencies and travel providers Fraud protection Protection against supplier insolvencies Agencies Travel providers Rebates paid on every transaction Reduced FX costs 100% data match between booking and payment - avoids time-consuming, manual reconciliation processes Unique value proposition Pre-funded model developed in partnership with Optal payment experts Unique banking relationships established Deep, strategic partnership with MasterCard Fully integrated into travel agency workflows and GDS-agnostic First mover advantage and proven business model Competitive advantage over commercial banks and our traditional GDS competitors Deployed in >70 countries 17 $92m reported revenue in FY 2015 for Travelport Strong barriers to entry 1H 2016 growth +81% Uniquely positioned for accelerating growth within the >$800bn addressable market
with revenue rapidly accelerating enett reported revenue (in $ millions) 4-Year CAGR 160% $92 More than 3/4 of FY 2015 revenue $67 $71 $45 $19 $2 2011 2012 2013 2014 2015 1H 2016 First mover advantage in a nascent industry Reliable solution with broad acceptance Generating EBITDA, net income and free cash flow since 2013 Moved to double-digit EBITDA margin % in Q2 2016 and scale realized 18
Investments in Beyond Air delivering strong, sustainable growth Beyond Air continues its strong growth +16% in FY 2015; +22% in Q2 2016 enett revenue up 36% with strong pipeline into 2016 (+81% in 1H 2016) Hospitality attachment rate 1 reached 47% in 2015; 48% - 1H 2016 Mobile performing well with recent major business wins including Etihad Airways, AMEX GBT and Aeroméxico Hospitality attachment 1 +11% FY 2015 Hotel room nights sold +11% FY 2015 +3% enett Revenue Car rental days sold FY 2015 +36% FY 2015 +8% Continued strong Beyond Air Revenue growth $ millions; CAGR FY 2012 FY 2015 +14% 326 371 CAGR15% +14% 424 +16% 492 FY 2012 FY 2013 FY 2014 FY 2015 19 1 Hospitality segments per 100 airline tickets issued
Our capital structure & capital allocation strategy Simplified and improved capital structure Continuing to build a track record of balanced and disciplined approach to capital allocation Significant reduction in total debt, from $3.8bn in 2011 to $2.4bn today Current debt is single tranche, raised publicly in the capital markets Covenant-light, fully pre-payable without any penalties and no significant maturities until 2021 Strong free cash flow conversion, even after debt servicing Target to reduce net leverage to around 3 times Adjusted EBITDA by 2018 Continued investment Returns to debt holders Mergers and acquisitions Returns to equity holders Debt repriced June 2016 reduced interest by 0.75% to L + 4.00% (L = 1.00% floor) 20
Outlook 2016 and beyond (in $ millions, except per share amounts) FY 2016 Guidance* Growth Net revenue 2,350 2,400 6% - 8% Adjusted EBITDA 565 580 6% - 8% Adjusted Net Income 145 155 19% - 27% Adjusted Income per Share diluted** 1.16 1.24 16% - 24% Long Term Goals By 2020, achieve: $3bn Travel Commerce Platform revenue, with >1/3 in Beyond Air > $250m Adjusted Free Cash Flow Adjusted Free Cash Flow 150 170 12% - 27% * Guidance assumes spot foreign exchange rates as of July 28, 2016 ** Based on expected FY fully diluted shares outstanding of 125m 21 The information presented here represent forward-looking statements and reflect our expectations as of August 4, 2016. We assume no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this presentation and in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016, quarter ended June 30, 2016, filed with the SEC on August 4, 2016..
Q2 2016 Earnings
Key point summary Strong revenue growth, up 9% Air and Beyond Air benefiting from recent customer implementations and new product innovations. enett revenue up 85% Adjusted EBITDA includes an $11m provision for prepaid incentives; 9% growth before impact of provision. Full year guidance unchanged % Successful repricing of debt and raising Adjusted Net Income and Adjusted Free Cash Flow guidance 23
Q2 2016 highlights $606m $139m $34m $0.28 $52m Net Revenue Adjusted EBITDA Adjusted Net Income Adjusted EPS (diluted) Adjusted Free Cash Flow 9% 1% $1m $0.01 $1m Travel Commerce Platform revenue up 10% Air revenue up 6% Beyond Air revenue up 22% (includes e enett up 85%) Technology Services revenue up 1% 24 Adjusted EBITDA up 1% to $139m Fully provided $11m in relation to European travel agency. Offsets 9 percentage points of growth from rest of business. Post-tax impact $9m Adjusted Free Cash Flow lower due to $14m of interest payments brought forward from Q3 as part of debt reprice
Revenue and Reported Segments Travel Commerce Platform Revenue ( growth) +6% +2% Air 4% (2)% 6% Beyond Air 19% 12% 12% 22% RevPas progression and growth +2% +1% +4% +10% $507m $518m $523m $574m Q2 2013 Q2 2014 Q2 2015 Q2 2016 +4% +10% $5.66 $5.75 $6.00 $6.61 Q2 2013 Q2 2014 Q2 2015 Q2 2016 CAGR +4% CAGR +5% Q2 2016 Travel Commerce Platform revenue & Reported Segments - Growth (%) Regions (% growth) Revenue Reported Segments International +15% +3% US (2)% (6)% All Regions +10% International % 73% 1 60% 2 Memorandum disclosure 3 US Ex Orbitz +1% (1)% All Regions Ex Orbitz +11% +2% 25 1 Represents International revenue as a percentage of Travel Commerce Platform revenue 2 Represents International Reported Segments as a percentage of Travel Commerce Platform Reported Segments 3 Represents growth excluding the impact of our renegotiated long-term contract with Orbitz Worldwide which was effected on January 1, 2015
Recent developments Air Air revenue ($m) Away 1 Air revenue +4% $410m $410m $401m $426m Q2 2013 flat (2)% Q2 2014 Q2 2015 Away 1 Air segments +6% Q2 2016 CAGR +1% Airline merchandising Air revenue (up 6%) benefited from airline merchandising, mix and pricing Leading the industry for airline merchandising with >200 airlines signed and ~170 implemented Q2 2016 66% 2 Q2 2016 46% 3 Q2 2016 ~170 Airlines 4 Expanded deals with Aeroméxico, Emirates and Aeroflot underscore breadth of Platform offering 26 1 Away bookings are defined as bookings made by travel buyers located outside the travel provider s home country 2 Represents % of total air segment revenue from Away bookings 3 Represents % of total air segments from Away bookings 4 Airlines live with merchandising including fares families, branded fares, ancillaries and tailored offers as of August 4, 2016
Recent developments Beyond Air Beyond Air revenue ($m) 48 Hospitality attachment 1 Q2 2016 stable enett revenue ($m) +19% $97m $108m $122m $148m Q2 2013 Q2 2014 Q2 2015 Q2 2016 +196% +12% 17m Hotel room nights sold +46% +12% Q2 2016 +2% +27% +22% CAGR +15% 24m Car rental days sold +85% $11m $16m $21m $38m Q2 2016 +2% CAGR +51% Beyond Air revenue (up 22%) benefited from Payments, Mobile, Hospitality; offset by Advertising Attachment rate maintained at 48; with hospitality segments and airline tickets issued both increasing Further progress in Mobile (Aeroméxico, COPA Airlines, edreams ODIGEO) and increased ownership stake in corporate booking platform Locomote enett revenue up 85% (1H: 81%) with strong share of wallet expansion; full year revenue outlook $145-$155m (+58-68%) Q2 2013 Q2 2014 Q2 2015 Q2 2016 27 1 Hospitality segments per 100 airline tickets issued
Summarized income statement (1 of 2) $ millions Q2 2016 Q2 2015 Better / (worse) Net revenue 606 554 9% Commissions (293) (259) (13)% Add back: Amortization of CLPs 18 18 (1)% Subtotal 331 313 6% % of Net revenue 55% 57% (1.9)ppts Technology costs (84) (76) (10)% SG&A* (108) (100) (8)% Adjusted EBITDA 139 137 1% % of Net revenue 23% 25% (1.8)ppts Depreciation on property and equipment (39) (39) Amortization of CLPs (18) (18) (1)% Adjusted Operating Income 83 80 3% % of Net revenue 14% 14% (0.8)ppts Adjustments (to GAAP Operating Income) (45) (17) (162)% GAAP Operating Income 38 63 (40)% 28 * SG&A excluding Non-core corporate costs
Summarized income statement (2 of 2) $ millions Q2 2016 Q2 2015 Better / (worse) Adjusted Operating Income 83 80 3% Interest expense, net 1 (40) (39) (2)% Subtotal 43 42 4% Remaining provision for income taxes 2 (9) (6) (44)% Adjusted Net Income 34 35 (3)% Amortization of acquired intangible assets (14) (19) 28% Other adjustments (to GAAP Net Income) (35) n/m GAAP Net (Loss) / income (14) 16 (188)% Adjusted Earnings Per Share diluted $0.28 $0.29 $(0.01) GAAP Earnings Per Share diluted $(0.12) $0.12 $(0.24) 29 n/m = percentage calculated not meaningful 1 Interest expense, net in Q2 2016 excludes a $6m unrealized loss on interest rate derivative contracts, which is included within GAAP Interest expense 2 Provision for income taxes excludes the Tax impact of adjusted items
Summary cash flows $ millions Q2 2016 Q2 2015 Better / (worse) Adjusted EBITDA 139 137 1% Interest payments (49) (35) (42)% Tax payments (4) (6) 33% Changes in working capital and other related 20 11 87% Customer loyalty payments (19) (19) 1% Defined benefit plan funding (1) (1) 18% Capital Expenditures 1 (34) (33) (2)% Adjusted Free Cash Flow 52 54 (3)% Other adjusting items 2 (10) (6) (60)% Dividend to shareholders (9) (9) (2)% Net repayment of term loans (2) (6) (58)% Acquisitions (15) n/m Other 3 (17) (13) (35)% Net (decrease) / increase in cash and cash equivalents (1) 20 n/m 30 n/m = percentage calculated not meaningful 1 Includes purchase of property and equipment of $23m (Q2 2015: $25m) and repayment of capital lease obligations and other indebtedness of $11m (Q2 2015: $8m) 2 Other adjusting items relate to (i) payments for corporate and restructuring costs and (ii) litigation and related costs accrued in 2012 3 Other primarily includes amounts relating to an increase in our controlling interest in Locomote, and debt finance costs and lender fees associated with our debt repricing
Net Debt and Leverage $ millions June 30, 2016 March 31, 2016 December 31, 2015 Term Loan 1 2,292 2,296 2,303 Capital leases and other indebtedness 118 129 134 Cash (127) (128) (155) Net Debt 2,284 2,297 2,282 LTM Adjusted EBITDA 2 554 552 535 Ratio 4.1x 4.2x 4.3x Net Debt stable at $2.3bn Term loans repriced Interest charge reduced Key terms Targeting leverage ratio of <4.0x by end of 2016 75bps reduction of interest rate following successful repricing of term loans in June 2016 Now paying LIBOR +400bps (with 1% LIBOR floor) equating to annualized pre-tax saving of ~$18m No significant maturities until 2021; further opportunity to re-price/re-finance post December 2016 31 1 Net of unamortized discount and unamortized debt issuance costs 2 Adjusted EBITDA on a last twelve months (LTM) basis
Redefining Travel Commerce dbaccess European TMT Conference, September 2016